Mortgage and rentpayments

Mortgage and rent payments in the Census

The Census collects information from each household about the mortgage and rent payments made in respect of the dwelling they occupied on Census Night. Data on mortgage and rent payments are important for policymaking and planning for housing, and the Census is the main source of these data for small areas and small subgroups of the population.

In the 2011 Census, householders were asked to respond according to the following instructions, for the dwelling which they occupied on Census Night.

The information from the Census on mortgage and rent payments provides a snapshot of the main housing costs paid by households in Australia on Census Night. A fuller measure of housing costs would include a range of outlays, such as property and water rates, body corporate fees, repairs, maintenance and dwelling insurance, which are necessary to ensure that a dwelling can continue to provide an appropriate level of housing services. Many of these costs are generally incurred by owner occupiers rather than renters.

Household and family incomes were not collected in the Census but were derived from personal income data. Personal income data are reported in income ranges in the Census. To impute household income for the Census, first an estimated median income is allocated to each person in the Census. This estimated median income is allocated based on the median income of respondents in the ABS Survey of Income and Housing (SIH) whose reported incomes fall within the same Census range. As each person is allocated an estimated median income, for most people that median will be above or below their actual income level.

If people living alone report their housing costs in the Census, the ratio of their individual housing costs to their allocated median income will in most cases be either an overstatement or an understatement of the true ratio for that person. For example, assume that all lone person households reporting an income within the Census income range of $400 to $599 per week are allocated an imputed median income of $500, and all report rents of $150 per week. All such households will be output as paying 30% of their income in rent. In reality, all those people with incomes in the range $501 to $599 will be paying less than 30%, and all those with incomes between $400 and $499 will be paying more than 30%.

Household income in the Census is calculated by summing these imputed median incomes for all persons in the household who reported income. For example, assume all two-income households where both incomes are reported in the range of $400 to $599 per week also report rents of $300 per week. The imputed household income will be $1,000 per week (2 times $500) and all such two income households will be reported as paying 30% of their household income in rent. The true ratios would be spread between 25% and 38%.

It should also be noted that individuals may tend to understate their incomes on the Census, compared with the amounts that would be reported in surveys designed specifically to measure incomes. The understatement would vary across ranges and by socio-economic characteristics, and may be magnified by the imputation process. For example, the only way a person can understate their income is by selecting a Census range that is below the range appropriate to their actual income. Therefore, if a person with actual gross personal income near the bottom of one range understates their reported income by selecting the next lower range on the Census form (perhaps by forgetting about a small component of their income), their imputed income will be further dropped to the median income of those people in the SIH reporting actual incomes falling in the lower range. This understatement is magnified when summing imputed personal incomes to family or household levels.

The use of a cut-off measure of the ratio of Census-reported housing costs to Census imputed incomes, such as a 30% threshold, may significantly overstate such measures. Comparison with the 2009-10 SIH results provides an indication of this overstatement. At the national level, the proportion of all households paying 30% or more of their income on mortgage repayments shown in QuickStats is about 1.5 times higher than estimates derived from the 2009-10 SIH. Similarly, the proportion of all households shown as paying 30% or more of their income on rent is about 1.3 times higher than estimates derived from the 2009-10 SIH. However, the level of overstatement would vary by socio-economic characteristics and therefore has differing impacts across subpopulations and geography. For example, the proportion of all households paying 30% or more of their income on mortgage repayments in Melbourne calculated from the Census is 1.8 times higher than the SIH estimate; however, for Perth, the proportion calculated from the Census is only 1.2 times higher than the SIH estimate.

For the reasons described in the fact sheet Income data in the Census, care should be exercised in the use of Census income information, particularly when using imputed household income information in comparisons of geographic areas with differing socio-economic characteristics. Much greater caution is required when using Census incomes in deriving ratios. While summing all of the reported housing costs and all the imputed incomes across a large geographic region will produce a reasonable average ratio for that region, ratios derived at the unit level and reported as a characteristic of the population in that region are likely to be misleading.

Rent payments in the Census

Reporting actual rents in Census supports analysis of rental charges across a region for different types of dwellings. However, wherever rental subsidies in cash are received, or where reimbursements are provided by an employer, interpretation of the ratio of housing costs to imputed Census income is less clear.

Mortgage payments in the Census

Apart from the issues with imputed incomes in the Census, mortgage repayment levels reported in the Census are difficult to interpret in terms of assessing housing costs. Households may be accelerating the repayment of principal on their mortgage (a form of saving), or reducing their repayments if they are already ahead of the payment schedule, or drawing on the mortgage for holidays, for school fees, or for investment elsewhere.

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